As one of the organisers of the new Seven Families initiative, Roy McLoughlin's mission statement is clear: he wants to raise the profile of income protection. He tells Paul Robertson about IPTF's plans to get the word out.
Anybody following protection news can’t have failed to notice a new initiative aimed at bringing the benefits of income protection to the public eye. Seven Families will follow the journey of seven families as they receive the benefits of an IP policy. But what does it all mean to the adviser? Should you be anything more than mildly interested?
Roy McLoughlin, as aworking IFA on the committee of the scheme’s organisers, the Income Protection Task Force (IPTF), thinks you should.
So just what is the IPTF? It was set up nine years ago with the object of getting distributors (smaller ones in the main), insurers, reinsurers and industry commentators talking about IP and trying to raise awareness of it.
“The backdrop was the almost useless sales figures, which were hovering around 100,000 a year but always flatlined,” said McLoughlin. “The idea was that, with
those four different types of people in a room, we would raise awareness with the public but also with the advisory community.
“No one could understand why income protection doesn’t sell in greater numbers.”
However, nine years is a fair time and the problem is still with us. McLoughlin can only note the positive that sales figures haven’t decreased and the perceived wisdom that protection might have taken a hit post-2008 hasn’t happened.
But the IPTF is not just a talking shop. It has published two white papers and has been training advisers for more than two years. “Some of that training, to be quite honest, is sales training.
Some people haven’t really heard of income protection before, so we’ve been raising the profile there. We’ve obviously also been in the press a lot,” McLoughlin added. “The people who said we are a talking shop, well they should come to the meetings because it’s not like that.”
So, in a change of tack, the industry is focusing on the Seven Families project. A clear point to make here is that this project is beyond the planning stage and, unlike not a few other industry initiatives, will actually be taking place, with the cash to run it already pledged.
So, to the base question: what does the IPTF expect to see from this, and what is in it for advisers? “For me, it’s one word – it’s awareness,” said McLoughlin. “It really is as simple as that. This isn’t actually about selling insurance, this is about awareness.
“I think, because I see it on a daily basis, the general public are confused about two issues. Firstly, they think that if they do become ill, the state will look after them, and the awareness piece there is making them aware of what, if anything, they get.
“Secondly, the thing I see all the time, which is people assuming they get paid out by their employer. An L&G stat was that 65% of people with mortgages think their employer will pay out if they become ill. That, in a nutshell, is the problem we have.
“The project will not necessarily have to point out that there’s something called income protection, on the basis that the public don’t want to be flogged insurance, but they need to work out that there’s a problem there and to identify the solution.”
McLoughlin added: “I think the general public are clever enough to work out for themselves that there’s an issue there. So it’s about awareness.”
In fact, with just over 30,000 advisers and potential sales in the millions, there are issues of supply. Would it be necessary that the majority of IP in the future be bought unadvised? McLoughlin believes this is an inevitability: “From everything I read about, we’re a diminishing breed, which is not good. So actually, the whole point of awareness is, if you make people aware of the situation, they will go off and source this themselves.
“But I’d still step back one part before that. I know people aren’t aware of what they get from their employer and what they get from the state. That’s step one. You have to do this in steps. If you throw too many facts that smell of insurance at people, they’re going to run away.”
McLoughlin’s speciality within his firm, Master Adviser, is group risk in the SME market. He has high hopes of a rollover impact into group risk.
“The great part of the awareness argument is that when people see these videos and read about it – remember it will be on YouTube as well – the inevitable question is ‘if I’m off ill, what do I get from work?’ There will be a natural stampede to the desk of the HR person to ask what happens if people are ill in terms of their work. And then I think there’ll be exposure, because only 8% of employers have group IP.
“Then hopefully employers will set up more schemes. But at the very, very least, the individual will know exactly how long they get paid for, as opposed to now when they don’t. And, without a shadow of a doubt, people have not got a clue.
“Ultimately, what are we doing here – what’s the end game? Raising the profile.”
While it is debatable whether IP will ever become a standard group product, with high sales, it is not impossible. After all, group critical illness policies are not that rare and they give very little benefit to the employer in terms of staff retention or getting the sick back to work. In addition, McLoughlin points out that there are only three million IP policies out there in a working population approaching 28 million, so there is plenty of room for growth.